[PPT] - The consequences of Brexit on Services and Establishment Dif PowerPoint Presentation

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The consequences of Brexit

n Services and Establishment

Dif ifferent Scenarios for Exi xit and Future Cooperation

Prof. Dr. Friedemann Kainer

University of Mannheim

28 February 2017 IMCO workshop on Implications of Brexit European Parliament

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Structure of f th the Presentation

1. Trade in Services and Establishment: Challenges for Market

Integration

2. Services and Establishment: Conditions for Integrated

Markets

3. Service Markets and Establishment under the EEA and

International Trade Regimes

4. Challenges for EU-legislation: transitory measures to match

legitimate expectations

5. Conclusion: Challenges for Negotiating

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Trade in in Services and Establishment: Challenges for Market In Integration

specific barriers to trade in services and cross border

establishment

barriers to trade are difficult to identify
regulations on services and establishment often address the

service supplier

services may need temporary access of staff or establishment
liberalizing trade in services can require regulation
common standards for licences or diplomas …
…allows mutual recognition of standards (e.g., licences, diplomas)
ideal solution: country-of-origin-principle, “passporting”

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Services and Establishment: Conditions for In Integrated Markets

negative integration
removal of hindering regulation
access to the market, competitive equality (national treatment)
may lead to mutual recognition of standards and supervision
positive integration
approximation of standards
eases mutual recognition
cuts off justification of restrictions
allows passporting
scope
commitment/annex method in international trade law
positive/negative list approach
reliable, enforceable subjective rights
transparent, applicable law; rule of law, direct effect
judicial review, legal unity

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Service Markets and Establishment under th the EEA

1. Substance of Law
largely aligned to the EU single market law
negative integration: fundamental freedoms of TFEU applicable
positive integration: EEA incorporates EU single market law into EEA law
scope: comprehensive, only few exceptions in the treaty
2. Quality of Law
EEA law does not have direct effect
Member States are obliged to transpose law into national law with direct effect
judicial review: EFTA Court, ECJ
3. Assessment
comprehensive integration of service markets
jurisdiction of the CJEU/EFTA-Court
passporting

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Service Markets and Establishment under a Customs Unio ion: EU – Turkey Customs Unio ion

1. Substance of Law
negative integration: freedom of services as a stand still clause; Association Council opened

negotiations on further market access

positive integration: only goods are covered by way of reference to EU secondary law
instrument rather for goods; services are normally not subject to tariffs
2. Quality of Law
international law, but direct effect in EU (no reciprocity)
judicial review: ECJ
3. Assessment
customs union as such has only little effects on the freedoms of services and establishment
often basis for closer integration (e.g., Andean Community, Eurasian Economic Union)
no passporting

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Service Markets and Establishment under CETA

1. Substance of Law
negative integration:
national treatment; most-favoured-nation treatment; market access; domestic regulation

shall not be arbitrary (clear, transparent, objective)

temporary entry/stay of natural persons fur business purposes
positive integration: framework to facilitate a regime for the mutual recognition of

professional qualifications (purpose: future mutual recognition agreements – MRA)

scope: negative list approach (but: positive list for the temporary entry of contractual

service suppliers and independent professionals)

2. Quality of Law
international law, no direct effect (“no private rights”)
judicial review: investor-to-state arbitration; dispute settlement
3. Assessment
ambitious approach; but: parties can require national license, registering or

qualifications

no automatic mutual recognition – potential for development
no passporting

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Service Markets under World Trade La Law (G (GATS)

1. Substance of Law
negative integration:
national treatment; most-favoured-nation treatment; market access
mutual recognition: framework for further negotiation
domestic regulation: shall be administered in a reasonable, objective and impartial manner
positive harmonisation: none
scope: unilateral commitments, positive list approach
2. Quality of Law
international law; no direct effect
Dispute Settlement Understanding
3. assessment
UK will remain a member of GATS (details are controversial)
commitments can be fixed unilaterally
no passporting

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Service Markets and Establishment: Step Back aft fter Brexit

European Union CETA FTA EU-S. Korea GATS

Negative Integration

Art. 56, 49 TFEU

market access, national treatment

Art. 9.6, 9.3: limited

market access, national treatment

Art. 8.1 ff.: limited

market access for investment

Art. 7.5 f., 7.9 f:

limited market access, national treatment

Art. XVI, XVII: limited

market access, national treatment Mutual Recognition

Art. 56, 49 TFEU,

Principle of origin framework to de- velop MRA (Art. 11) mechanism on negotiation of MRA framework for further negotiation Common Standards

Art. 114, Art. 62, 53

TFEU (-) (-) (-) Scope not restricted negative list positive list positive list, uni- lateral Direct Effect yes no no no Judicial Review CFEU arbitration, restricted restricted restricted

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Services and Establishment under CETA: Market Access in in Detail

EU CETA Market Access in the Treaty Law

Art. 56, 49: right to access markets free

from unjustifiable discrimination and hindrances (e.g., national diploma) self-executing mutual recognition

Art. 9.6, 8.4: prohibition of free from

unjustifiable discriminations and quantitative restrictions no self-executing mutual recognition Secondary Law numerous regulations and directives (see EU mapping: overview of internal market and consumer protection related legislation) negotiation to achieve MRA Enforcement of Law direct effect, legal review CJEU no direct effect, arbitration in investment disputes

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Example: Cross-Border le legal Service or Establishment of f a La Law Firm

market access under Art. 56, 49 TFEU recognition of legal diploma, directives 77/249/EE, 98/5/EC in principle: full freedom to offer legal services

EU

market access under

Art. 9.6, 8.4

no MRA restrictions apply under Annex I

CETA

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Challe llenges for EU-legis islation: Transitory ry Measures to Match Legit itim imate Exp xpectations

the problem: service providers and established persons from UK
the legal issue:
when Brexit becomes effective: UK citizens lose rights under Art. 56, 49 TFEU
expl.: recognition of an English companies (Private Ltd.) in Germany
is there a legal obligation to enact transitory measures?
possible legal approach:
legitimate expectations
representation of continued existence of rights vs. Art. 50 TEU?
acquired rights
but: restricted to property and certain contractual rights
intellectual property rights would “survive” Brexit, right to work does not
possible solution: intertemporal application of law for old cases
better: EU legislation

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Conclusions: Challenges for Negotiation and Regulation

1. the design of a free trade agreement must consider the specific

challenges for cross-border trade in services and establishment

2. the models CETA, FTA EU-Korea and GATS lag way behind EU/EEA
no comprehensive scope
no common standard setting
no direct effect of market access and national treatment rules
3. challenges for the negotiation process with UK
to extend the scope of the freedom of services and establishment
to find a mechanism for common standards
to shape the principle of mutual recognition as self-executing rule
to come close to direct effect and effective judicial protection
4. challenges for EU legislation: adapting secondary law